Performance Reviews

Mochary Method’s Perspective on Performance

Performance review structures can be time-consuming for your managers. There are many recommendations on how to set them up at a company with varying levels of effectiveness.

In this write-up, I’m documenting anonymized case studies of three companies we coach, and how they implemented performance reviews under the Mochary Method.  You can read books and articles to become masters of people management frameworks, but it’s hard to know exactly what successful companies implemented and what they learned. That is one of Mochary Method’s unfair advantages: we get detailed information on what the fastest-growing companies (Coinbase, Plaid, Brex, Scale, Reddit, etc.). And we are working hard to share that with you.

Mochary Method has a philosophy of performance review is centered around frequent feedback in 1:1s. If your managers are giving clear feedback on a weekly to biweekly basis, it’ll be far more efficient than running quarterly performance review cycles. You’ll also see more incremental improvements from your employees.

❌ Problems with quarter performance review cycles

• It takes a lot of time for managers to recall and write feedback for their direct reports that reflect the entire quarter.
• Feedback will get lost or forgotten, therefore not giving employees more opportunities to improve.
• Critical feedback could take up to a quarter to be communicated. High performers don’t get the recognition and motivation frequently. Low performers grow slower.
• There will be less mastery of the skill to give and receive feedback across the company.

✅ What do you need to set it up?

• First, set up the Mochary Method 1:1 process. (1-1 Template and Instructions) This will provide you with the context, cadence, and written documentation for frequent feedback. In these 1:1s, mutual feedback is a necessary step at every meeting.
• After 1:1s are implemented, use the Feedback doc and provide Absolute Feedback to your direct reports each time. It’s critical to give Absolute Feedback versus other kinds of feedback (emotional, relative, etc.). Absolute feedback gives clear communication to the employee on how they’re performing. It provides you with a common measurement for feedback across the entire company. There is little room to misunderstand the context of your feedback. It’s also natural for you and your direct report to discuss how they can improve that absolute score.

👉 Learn more about Absolute Feedback

People also need to know where they stand on an absolute basis. Do not wait until year-end Performance Reviews. Most people have constant anxiety when they aren't sure where they stand. Giving absolute feedback regularly (at least monthly in a 1-1) will eliminate this anxiety. The bad news is less anxiety-inducing than no news.

To give it, state:

1. Your current rating for your job function, 1-5, is …
   4-5 is above expectation
   3 is at expectation, and you can outperform by following next-level guidance.
   2 is below expectation, and you can quickly improve with next-level guidance.
   1 is far below expectation. I am now putting you on a written Performance Improvement Plan.
2. What you did that I liked is ...
3. What you need to do to get to the next level is …

Case Study #1: CEO implements monthly Absolute Feedback at a 1300-people company

We once coached a very successful CEO of a 1300-people company. This CEO wanted every employee to get Absolute Feedback every month.

She implemented feedback software across the whole company to ensure that managers were giving absolute feedback. This proved tremendously successful in the long term (after 3 months).

There were 2 problems with the rollout in the first 3 months:

• People hated the software, and it took them about 3 months to get used to operating the tool. Now people are used to the tool, and everything is fine.
• Solution: In hindsight, the CEO would have given classes to the team on how to use the software for the first time.
• The feedback was given on a 0-10 scale, where 5 was "meeting expectations". Some employees associated 5 with an F, and freaked out when they got that grade.
• Solution: Use a 1-5 system instead, with 3 as meeting expectations. This has no grade correlation in US schools.

Case Study #2: CEO enforces weekly feedback by every manager at a 600-people company

Another one of our clients, a CEO of a 600-people company, expects every single one of her managers to give feedback on a weekly basis. Performance Reviews are too slow (and don't work if it's only once a quarter.)  Instead, she defaults to feedback once a week, and if an employee is struggling, she turns to the manager to see what the manager is doing to help that person.

This is how she framed the weekly feedback requirement:

We explain to our managers that we want to create the most elite team possible and that letting go of low performers helps create that high bar.

Solution: To do this, we track managerial feedback and spot-check on a weekly basis in performance management software. I personally look to see: are my direct reports giving feedback once a week to their direct reports?

If someone is NOT giving feedback to their direct reports, we tell them verbatim, “This is unacceptable. How can your direct reports know if they’re doing something well or not if you don’t tell them in a Feedback format?”

Solution: From these weekly reviews, we perform quarterly reviews. If someone is underperforming, we put them on a PIP, and in two weeks if they don’t improve, we let them go.

It’s worth mentioning that we do this with execs too: if it’s been two-quarters of consistent “needs improvement,” we’ll PIP them too. It’s important to send the message to the team that execs are not immune from this either.

Case Study #3: CEO implements monthly feedback system at a 40-people company

We coached a brilliant CEO of a 40-people company. This company first rolled out the feedback system to the exec team first. Then, the exec team started using it with their team leads.

They are using a 1-5 system rating system for Absolute Feedback. They are also giving reports the option to receive absolute or relative feedback.

They are not using new software to do it.

Even though the rollout is smooth, the problem is that it took longer.

• The stronger performers are asking for absolute feedback. The weaker ones are asking for relatives.
• Solution: The company will start giving absolute feedback to all. The intention of the system is for everyone to know where they stand, especially the lower performers.

Summary

💡  In summary, here are all the highlights and learnings from our 3 case studies:

• Frequent feedback (weekly to monthly) is key to creating high-performing teams.
• Enforce Absolute Feedback on a 1-5 scale is the most effective framework for managers.
• Feedback should be documented in software to create accountability in managers. Bonus point for having a DRI (DRIs:  Directly-Responsible Individuals) to spot-check if feedback is being given.
• If you’re rolling out a new software along with the performance review system, ensure there are ample training opportunities for your employees.
• Implement the same system for the executive team and the rest of the company.

Special thanks to Regina Gerbeaux and Matt Mochary for sharing their case studies with me. I’m also grateful to our coaching team for giving me feedback on my write-up each time.